Development and Underdevelopment in the History of Economic Thought

Resource curse and rent paradoxa in economic development: classical frameworks and modern discussions

Sturn Richard, Institute of Public Economics & Graz Schumpeter Centre, University of Graz

Great wealth in economically exploitable natural resources is not always associated with eco-nomic prosperity and welfare. In the last three decades, a literature with a primarily empirical-econometric orientation has expanded rapidly, especially in the wake of Sachs/Warner, which deals with this phenomenon addressed by Richard Auty as resource curse (resource trap) - i.e. with a phenomenon that at first glance seems paradoxical, although it has been observed and discussed in different variants for centuries. From Spain's economic backsliding in the concert of European powers after the exploitation of Latin American precious metal deposits to the vicissitudes in the development of some oil-exporting states in more recent times, many epi-sodes illustrate conjectures according to which a country's wealth in raw materials often does not go hand in hand with macroeconomic dynamism and social welfare, but rather has a downright detrimental or at least ambiguous effect. Historical sketches of such episodes sug-gest, moreover, that such wealth tends to be detrimental to the development of productive potential and creative entrepreneurship, and/or that it harbours conflict potentials that some-times erupt in more or less costly and sometimes violent conflicts. On the basis of econometri-cally processed data-supported empirics, the resource curse has been confirmed in many stud-ies of recent decades, although there is no lack of relativising methodological considerations and empirical findings.

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Keywords: Resource curse, development, rent